FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank

 
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
FEWLing the Growth
Food, Energy and Water nexus for
      Livelihood Security in India
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
TITLE        FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India

YEAR         February, 2018

             Chandan Bhavnani, Himanshu Shekhar, Nitesh Chandra, Arnesh Sharma, Parajdeep Singh
AUTHORS
             Dhillon (Responsible Banking, YES BANK)

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FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
FOREWORD
FEWLing the Growth: Food Energy and Water nexus for Livelihood Security in India

Food Energy and Water nexus for Livelihood Security in India form the three quintessential resources
that are critical to fuel economic growth and ensure livelihoods, underpinning achievement of
75% of the Sustainable Development Goals (SDGs). These three hold the key to an equitable and
sustainable future, especially for India, which have the potential to be the second largest economy
by 2050 with a GDP of USD 42 trillion in Purchasing Power Parity. By 2050, with a population of 1.7
billion people, India would require 30% increase in food production and face 32% increase in water
demand from 2017 levels. Further, more than 880 GW of new power generation capacity would be
needed by 2040. The challenge of Food, Energy and Water security in India is, thus, going to be a
decisive factor in India’s development story.

Food, Energy and Water have an intricate network of inter-linkages and interdependencies running
across the economy. This results in transcendence of vulnerabilities in one resource to the other two.
Such complex and dynamic interactions among the three resources, coupled with the increasing
demand and constrained supply, exacerbated by climate change, necessitates a paradigm shift from
the conventional fragmented approach to a nexus approach in managing these resources.

The report titled “FEWLing the Growth: Food Energy and Water nexus for Livelihood Security
in India”, highlights the positive policy signals and actions on ground by private sector towards an
integrative approach on managing FEW resources. The report provides national and global best
practices on leveraging the nexus, centered on overall resource efficiency and livelihood generation.
These case studies hold huge potential for replicating and scaling the nexus approach in current
policy and business landscape to create maximum impact.

The report outlines a strategy-risk-return model for mainstreaming the nexus approach, with
strategies targeted at effective mitigation of vulnerabilities and risks to livelihood through an
integrative approach, while leveraging innovative technological and financial solutions for optimum
returns. The report charts an implementation roadmap with four critical elements for FEWLing
the growth of nexus approach -Framing enabling ‘nexus-sensitive’ policies, Establishing innovative
business models and financing mechanisms, Weighing the trade-offs and exploring synergies
between the sectors and Leveraging the power of partnerships to achieve FEWL security.

I am confident that this report will provide important insights for policy makers, industry,
communities and all relevant stakeholders in integrating Food-Energy-Water nexus approach
throughout the economy, with an objective of ensuring livelihood security and identifying mutually
synergic responses to India’s developmental challenges.

Thank You.

Sincerely,

Rana Kapoor
Managing Director & CEO
Chairman
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
EXECUTIVE SUMMARY
In the backdrop of the birth of the 7 billionth human, the former United Nations Secretary General
Ban Ki-moon gave a historic address at the 66th General Assembly, which emphasized the need
for connecting the dots between climate change, water scarcity, energy shortages, and food
security. This appeal for providing a holistic solution for the Food, Energy and Water (FEW) security
challenges is especially relevant for India today. The country’s ambitious economic and policy targets,
including the predicted high GDP growth of 8%, 175 GW of renewable energy and the Sustainable
Development Goals (SDGs), are impeded by challenges like burgeoning population, falling water
tables, high dependence on conventional sources of energy and low agricultural productivity. These
challenges can however be met if ‘FEW’ is considered as a nexus.

This report, “Food Energy and Water nexus for Livelihood Security of India” portrays the need for
recognizing the FEW nexus and its management as a means to achieve livelihood security. This need
is evident in India by the resource constraints faced in these sectors, because of the demand side
factors (such as overpopulation, rapid urbanization and industrialization) and supply side factors
(such as dwindling resource stocks and climate change). While the necessity of a unified approach
becomes ever more critical, there are some systematic challenges that might delay this uptake,
including the lack of a universally accepted framework for FEW integration, low penetration of
proven modern technologies, cross departmental and State Government coordination and more
importantly, lack of proper financing structures.
                                                                                  FEW
Though the nexus of Food-Energy-Water is                                      Integration

yet to be recognized formally by the Central
or State Governments, a number of measures,                                                              Seasonality

both by the government as well as private sector        Technology
                                                        Integration
propagate the integrated well-being of more
than one sector. This is evident from the policy
landscape of agriculture, water, energy and                                            Risks                       Shocks

industrial sectors, where a number of forward                         Strategies
looking policies ensure that achieving resource
efficiency in the respective sectors does not      Development
                                                    Initiatives                     Returns                      Public
lead to negative impacts in others. Similarly,                                                                  Finance

business response to the externalities in FEW
sectors have been encouraging, especially
amongst industries highly dependent on FEW
resources, like food processing, power and iron                       Blended                  Private
                                                                                               Finance
& steel.                                                              Finance

Taking learnings from local and global application of FEW nexus approach, this report delves into
the process of mainstreaming it in India, to not only provide efficient utilization of resources, but to
generate livelihoods. Mapping the shocks and seasonality risks associated with livelihoods to the
availability of the FEW resources, strategies for the implementation has to be holistic. Generation
of livelihood opportunities would need to be enabled by cutting edge technology and its end to
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
end integration, guided by the policy and institutional framework. Leveraging latest technologies
like Information Communications & Technology (ICT), Internet of Things (IoT), blockchain and other
cloud based solutions to ensure efficient utilization of resources and supportive policy framework
are enablers to such technologies.

Finance as a sustainability catalyst has a tremendous potential. Conventional financing tools, like
subsidies and tax holidays, in conjunction with emerging tools and techniques, like Public Private
Partnerships (PPP), blended finance and capital markets can act as facilitators of FEW nexus approach
to generate livelihood.

For successful implementation of a nexus approach throughout the economy, framing enabling
policies, establishing innovative business models and financing mechanisms, weighing the trade-
offs and exploring synergies between the sectors and collaborations among all key stakeholders is
imperative.

With the suggestions and opportunities presented, this report aims to focus the efforts of
policymakers and businesses alike in recognizing the FEW nexus and framing appropriate response
to ensure proper resource utilization and livelihood generation.

Namita Vikas
Group President & Global Head, Climate Strategy & Responsible Banking
Distinguished Fellow
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
C O N T E N T S
1.		Introduction                                                11

     1.1		Food-Energy-Water nexus                               13

     1.2		Need for FEW nexus approach in India                  13

     1.3		Implementation Challenges                             15

2.   FEW nexus approach in India                                17

     2.1		Policy landscape                                      18

			      •		FEW nexus Approach in Agriculture                   18

			      •		FEW nexus Approach in Energy                        20

			      •		FEW nexus Approach in Water                         20

			      •		FEW nexus Approach in Industry                      21

     2.2		Business Response                                     22

			      •		Food processing                                     22

			      •		Power                                               23

			      •		Iron & Steel                                        24

3.   Global Applications of FEW nexus Approach                  27

     Case Study 1: India                                        28

     Case Study 2: Mexico                                       29

		Case Study 3: Kenya                                           30

		Case Study 4: Australia                                       30

4.   Mainstreaming FEW nexus approach for livelihood            33

     4.1		Risks and Vulnerability Context                       34

     4.2		FEW Resource Assets                                   35

     4.3		Strategies for improving livelihoods – FEW Approach   35

     4.4		Finance as a Sustainability Catalyst                  37

			      •		Conventional financing tools                        37

			      •		Emerging Financing Tools for FEW                    37

     Conclusion                                                 45

     References                                                 47
FEWLing the Growth Food, Energy and Water nexus for Livelihood Security in India - Yes Bank
1
    Introduction

        FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   11
1
                                   Introduction

The year 2017 marked the 2nd anniversary of the adoption of the Sustainable Development Goals
(SDGs) and the Paris Agreement. The world congression at the One Planet Summit witnessed
policymakers, businesses and civil society unanimously reiterating the need for a low carbon and
sustainable future. Incidentally, the year also witnessed losses of USD 330 billion from natural
catastrophes globally, affecting 40 million people in South Asia alone during the monsoon floods
(Munich RE, 2018). Clearly, the increasing rate of natural calamities, fueled by climate change, need
dedicated efforts and cooperation from multiple stakeholders to secure the future of the planet
and ensure well-being of future generations.

Globally, SDGs provide a blueprint for achieving transformational change, through collaboratively
addressing development priorities in a resource constraint world. If we look at the shared challenges
currently faced by the world, Food, Energy, Water and Livelihoods (FEWL) clearly emerge as cross-
cutting thematic areas that will be instrumental in achieving 75% of the total 17 Global Goals. This
makes consideration of Food-Energy-Water-Livelihood even more critical in the Indian sustainable
development context.

India has made rapid strides in socio-economic development in recent years and has emerged as
a global power, with the country tipped to be the world’s fastest growing major economy in 2018
(World Bank, 2018). However, the challenges of poverty, food security, clean water and energy
access for all, still persist. Currently, India ranks at 100th position in the Global Hunger Index among
119 nations, worse than many smaller Asian peers (Global Hunger Index). Over 311 million Indians
still live without access to electricity (Banerjee, et al., 2015) and 63 million without the access to
clean sources of water for their daily usage in rural areas (Stewart, 2017). Additionally, per capita
availability of land, water and other natural resources continue to shrink at an alarming rate, while
the country’s demand for critical resources is rising with the growing population. Fueling future
growth for a young and growing population, without degrading natural resources, is indeed a
fundamental development challenge for our country.

 12   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
1.1 Food-Energy-Water nexus

Food-Energy-Water (FEW) resources are critical to human existence and industrial production, and
their security is paramount to sustaining livelihoods in the country. These critical resources are
inextricably linked to each other, with an action / intervention in one area often impacting others.

These two-way relationships between the three resources create challenges in managing them.
Therefore, it is important that these sectors are viewed from a nexus approach to understand
the considerations of their linkages and inter-dependence, essential for integrated resource
management. This dynamic relationship among the food, water and energy sectors is depicted in
the Figure 1 below:
                                Figure 1: Food-Energy-Water nexus

Energy for Water                                                                             Food for Water
• Pumping / Supply                                 Water                                     • Prevents surface
• Water / Waste water                                                                          runoffs
  treatment                                                                                  • Root system
                                                                                               purification

Water for Energy                                                                             Water for Food
• Hydropowe                                                                                  • Irrigatiopn
• Thermal Energy                                                                             • Fisheries
  production process                                                                         • Animal Husbandry
                                                                                             • Food processing

                          Energy                                               Food

                   Food for Enery                          Enegy for Food
                   • Bio fuels                             • Harvesting
                   • Food waste to Energy                  • Transportation
1.2 Need for FEW nexus approach in India                   • Food processin

Achieving Food-Energy-Water security, amidst dwindling supply of land, water and other vital
ecosystem resources, poses significant challenges for a developing country such as India. Grappling
with issues of affordability and equitable distribution of Food-Energy-Water for all, India is poised
to face an unprecedented demand for these resources. The various influencing factors or drivers
of change affecting the demand and supply of FEW resources and the key trends are summarized
in following table 1.

                                    FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   13
Table 1: Influencing factors for FEW Resources
Factor influencing                Key Trend
Demand
Population Growth                 In the past 70 years since independence, population of India has more than
                                  quadrupled from approximately 330 million in 1947 to 1.34 billion in 2017 and
                                  is expected to increase to 1.51 billion by 2030, peaking at 1.68 billion by 2061
                                  (UNDESA/Population Division 2017).
Rapid Urbanization and            India is moderately urbanized with 31.1% of population living in urban areas,
improved standard of              which is expected to grow to 50% by 2051 (MoUD, 2017).
living                            Rapid economic growth has led to an improved standard of living for India
                                  with the per capita income growing by six times between 1990 and 2016
                                  (World Bank, 2016).

Industrialization                 India’s ambition to increase the share of manufacturing in its GDP from 17.1%
                                  to 25% by 2022 (IBEF, 2017) is expected to further drive significant energy and
                                  water demand.
                                  The Indian agriculture is also expected to increase mechanization from the
                                  current level of below 50% (Business Today, 2016).
Resource Constraints              India is set to become a water scarce country by 2025 (study conducted by
                                  EA water), with per capita availability of water going down to 1341 m3 in 2025
                                  and 1140 m3 in 2050 (PIB, 2017).
                                  India is heavily dependent on importing its sources of energy, with an import
                                  dependence of 34.3% of total energy use, which is expected to go up to 59.3%
                                  by 2047 (Niti Aayog, 2015).
                                  India’s crop yield of 3721 kg/ha is much lower than the world average of 4548
                                  kg/ha, requiring additional land resources to meet its growing food needs
                                  (NITI Aayog, 2015).
                                  Ground water, which forms the major source for fresh water, is depleting at an
                                  alarming rate.
Climate Change                    Recent studies at the Indian Agricultural Research Institute indicate the
                                  possibility of a loss of 4-5 million tons in wheat production in the future with
                                  every rise of 1°C temperature throughout the growing period (Shrivastava,
                                  2016).
                                  Rice production is slated to decrease by almost a tonne per hectare if the
                                  temperature rises by 2°C (Shrivastava, 2016).
                                  Many power plants in India, such as the 2600 MW Tiroda plant in
                                  Maharashtra, had to shut down temporarily in 2016 due to a lack of water,
                                  with such instances likely to increase in future (IEA Clean Coal Centre, 2017).

These influencing factors exert pressure on India’s resource consumption, especially the FEW
resources. With competing demand for these inter-linked resources, an important aspect of
effective management and driving efficiency, while minimizing negative trade-offs, would be to
minimize conflicts among the three resources. Instead of managing food, energy and water in silos
through stand-alone policies and funding instruments, promoting greater synergies is required to
promote integrated and holistic cross-sectoral development.

An instance of the nexus impact of policies taking a ‘silo’ approach is the traditional support of
State policy towards improving yield, through subsidization of agriculture inputs including power
for pumping water, in the form of electricity and diesel and agricultural inputs like fertilizers and
chemicals.

 14   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
The energy tariffs for irrigation purpose have been heavily subsidized, with 20 States subsidizing
it more than 50% and just one State of Tripura charging more than average cost of power from
agriculture (Figure 2).

Figure 2: Indian states subsidizing electricity for farmers, (IndiaStat 2014) (*calculations based on
                                   28 states present in 2013-14)

                        4%

                                 25%
              25%                                               Full Subsidy
                                                                Subsidy between 50 & 100%
                                                                Subsidy between 0 & 50%
                                                                No Subsidy
                         46%

Such policies have led to depletion of water resources and misuse of electricity, and have not been
able to improve the agricultural productivity beyond a threshold (NITI Aayog, 2015). Groundwater
pumping and other agricultural practices account for 17.3% (MOSPI, 2017) of total electricity
consumed in the country, and the groundwater table has seen depletion in 65% of the wells
tracked (CGWB, 2016).

It is apparent that the conventional approach of individually managing Food-Energy-Water is not
the best option in view of the rising strain on these resources. On the contrary, an integrated
FEW nexus approach opens up new opportunities that can be leveraged through adoption of
innovative technologies and solutions. For instance, ‘System of Rice Intensification’ is a technique
of rice cultivation without flooding fields, which has benefitted farmers in Andhra Pradesh, Tripura,
West Bengal, and several others states. The technique provides higher yield of rice, while requiring
half the amount of water. This comprehensive technological and implementation push by state
policies provides a clear and compelling case to look at Food-Energy-Water holistically.

1.3 Implementation Challenges

Adopting a FEW nexus approach from a policy and corporate strategy standpoint has clear
advantages. However, the progress towards implementation has not been very fast paced and the
scope has been limited. Some of the barriers towards mainstreaming this approach include:

   •   Lack of a universally accepted framework for FEW integration: Various studies have explained
       the nexus and the multiple interdependencies, but evaluation of project / policies against a
       nexus approach remains limited (Pittock, et al., 2015) (Endo, et al., 2017) (Endo, et al., 2015).
       The frameworks available present a qualitative evaluation of the impacts (Rasul, 2016) on
       various economic activities or are very strongly related to a particular implementation. A
       simpler framework for evaluating the risks and opportunities may be needed for deeper
       understanding of the nexus approach among decision makers and businesses alike.
       The frameworks may also provide simple comparison amongst the available solution
       choices

                                     FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   15
•     Low penetration of proven modern technologies: The penetration of FEW effective modern
            technologies is still very low in India. For example, India has just 5.5% integration of Micro
            irrigation systems, (ICAF, 2015) which are proven to have multiple benefits including saving
            in terms of water and energy and increasing area under irrigation. There is a clear need to
            assess the barriers in adoption of efficient technologies and address them for large scale
            penetration

      •     Cross departmental and State Government coordination: The interdependencies amongst
            the FEW resources make it imperative to work across different departments and ministries.
            The FEW resources also involve both Central and local Government departments in effective
            management. Therefore, a nexus of departments, or a steering committee of different
            authorities may be required for effective impact assessment and decision making

      •     Lack of proper incentive structures and enhanced financial viability: The incentive structures
            needs to be reoriented to promote synergies between the inter-dependent sectors and all
            the actors should come together with their blended expertise to commit financial support
            in piloting and scaling financially viable and environmentally sustainable projects

Thus, in order to surmount the pressing need of managing resources, economy and livelihoods
more effectively, nimble policies coupled with innovative business solutions are required to
overcome implementation challenges and create an enabling environment for effective transition
to a sustainable Food-Energy-Water nexus approach.

 16       FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
2
    FEW nexus Approach
    in India

       FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   17
2
                                   FEW nexus Approach in India

The constraints on Food-Energy-Water resources, with apparent impacts on the livelihood have
stimulated both the Government and corporates to start integrating the nexus approach for
promoting resource efficiency. This is evident from the current policy landscape and business
responses.

2.1 Policy landscape
Livelihood generation and improvement has always been at the center of the policy objectives
of both the Central and State Governments. As agriculture remains the backbone of livelihoods
in the Indian economy, with 44.3% of the population (World Bank, 2017) being dependent on it
directly or indirectly, and agriculture being the biggest consumer of water, the FEW policies are of
immense importance in the sector. India is also witnessing the manifestation of FEW nexus aligned
policies in other sectors including energy, water and industries. The recent budget for FY 19 also
highlighted the policy emphasis on improving farmer income.

FEW nexus approach in Agriculture

Given the need for resource efficiency in the agriculture sector, and to enhance the livelihood of
farming families, Government has undertaken radical policy initiatives including Hon’ble Prime
Minister Shri Narendra Modi’s call for ‘More Crop, Per Drop’. Consequently, the new agriculture
policy (RRTD, 2017) earmarked sustainable agriculture and effective utilization of water and
chemical inputs as one of the key objectives.

 18   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
•   Focus on creation of climate resilient production systems for crops
   National            and animal husbandry
  Mission on
                   •   Identifies 10 key dimensions for promoting suitable agricultural
  Sustainable
                       practices
  Agriculture
   (NMSA)          •   ‘Water use efficiency’, ‘Nutrient Management’ and ‘Livelihood
                       diversification’ form 3 important dimensions

                   •   Focus on ‘Har Khet Me Pani’ and ‘More Crop Per Drop’

Pradhan Mantri     •   99 major/medium irrigation projects (irrigation potential of 76.03
                       lakh ha) have been identified for completion in phases by December
 Krishi Sinchai
                       2019
     Yojana
                   •   Enhance adoption of precision-irrigation and other water saving
                       technologies

National Project   •   PKVY promotes organic farming through a cluster approach along
  on Organic           with Participatory Guarantee Scheme (PGS) to ensure the integrity of
Farming (NPOF)         products
& Paramparagat     •   NPOF focus on providing the necessary capacity building, standards
  Krishi Vikas         creation, quality control and low cost certification of organic
 Yojana (PKVY)         produce

                   •   Promote Integrated Nutrient Management (INM) through
                       appropriate use of chemical fertilizers and regulation of
  Soil Health          micronutrients to boost production
 Management
    (SHM)          •   Soil Health Card are used to recommend ways to improve the soil
                       quality, decide appropriate dosage of nutrients for improving soil
                       health and fertility

   National        •   Focus on restructuring and strengthening agricultural extension of
  Mission on           modern efficient technologies
  Agricultural     •   Promote use of Information and Communication Technology (ICT)
 Extension and         and popularization of modern technologies to increase efficiency
  Technology       •   Capacity building and institution strengthening to promote
   (NMAET)

     Solar         •   Provide capital linked subsidy schemes for solar pump adoption
 Photovoltaic      •   Initial target of 1,00,000 solar pumps across India with financial
Water Pumping          support of INR 400 crores
 systems for       •   31,472 solar pumps installed in 2014-15, higher than total number of
  Irrigation           pumps installed in the last 24 years

                             FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   19
FEW nexus approach in Energy

India is primarily dependent on fossil fuels to meet its energy requirement, with electricity
generation capacity mostly being thermal. But in the recent past, India has witnessed a surge in the
renewable energy mix that aligns with the FEW nexus approach to a great degree. With multiple
benefits including addressing energy security and very low water consumption compared to fossil
fuel technologies, renewable energy is being fuelled by ambitious targets and supporting policies.

                         Supporting Renewable Energy Policies
                         •    Ambitious renewable target of 175 GW capacity by 2022, contributing to 6%
                              of the total power supply (IESS)
                         •    Policies like Jawaharlal Nehru National Solar Mission (JNNSM) and
                              establishment of solar parks have been instrumental in creating a favorable
                              environment

                         New Hydro Policy (Draft)
                         •    Seeks to declare all hydro power as renewable energy, irrespective
                              of its size
                         •    Hydro Power Obligation benefit to projects attaining Commercial Operation
                              Date (COD) within specified period
                         •    Interest subvention during construction / post commissioning with funding
                              pattern on grant basis

                         National Policy on Bio-fuels (Draft)
                         •    Use of surplus food grains to augment production of Ethanol
                         •    Indicative target to blend 20% ethanol in petrol and 5 % bio-diesel in diesel
                              by 2030
                         •    The policy also encourages production of second generation biofuels
                              through viability gap funding

India’s renewable energy push has created 6,21,000 employment opportunities in 2016 (IRENA,
2017) and is expected to generate more than 3,30,000 new jobs over the next five years. Renewable
energy holds enormous potential to tackle poverty in rural communities by providing steady
incomes, healthcare benefits, and skill-building opportunities to unskilled and semi-skilled workers
(CEEW, 2017).

FEW nexus approach in Water

Among the FEW resources, water is the most vulnerable resource, and has led to conceptualization
of schemes, policies and programmes in water sector, that align well with the FEW nexus concept.
Some important ones are:

 20   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
•   Arrest the pollution of Ganga river and revive it through developing
      ‘Namami Gange’         industrial effluent and sewage treatment infrastructure
         (National
                         •   Consolidate existing ongoing efforts into a concrete action plan
          Mission
         for Clean       •   Focus on ensuring minimum ecological flow, promoting tourism &
          Ganga)             shipping and Ganga knowledge management

                         •   Targets linking Indian rivers with a network of canals and reservoirs

         Interlinking    •   Increase water availability for drinking and irrigation
           of Rivers     •   Requires heavy infrastructure investment needs to the tune of INR
             (ILR)           5.5 lakh crores

                         •   Creation of sustainable cities with effective resource and waste
         100 Smart           management
      Cities Mission &   •   Municipal bond Programme, with 2% interest subsidy aiming to
          Municipal          revive municipal bonds market
       Bond Program      •   Pune Municipal Corporation issued INR 200 crores bond to fund
                             water metering project

                         •   Rajasthan became the first state to instate a sewage and waste
         Emerging            water policy in 2016
        Waste Water      •   Jharkhand has also come up with waste water policy in 2017
        Management
          Policies

The water policies have been concentrated on enhancing the availability of water for drinking
and agricultural purposes, with multiple impacts such as creation of alternative occupation
opportunities like fisheries, tourism, and transport, thereby boosting livelihoods.

FEW nexus approach in Industry

Industries are crucial in livelihood creation and economic growth. With the growing resource
scarcity and impacts of climate change, Government has been active in strengthening the sector
through augmenting productivity, while addressing resource inefficiencies. MSMEs form the most
important sub-segment to focus on, with over 51 million units in India and accounting for a
workforce of 117 million (Ministry of MSMEs, 2017).

                                   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   21
•    Promote sustainable production technologies
           Zero Effect,
                                    •    Integrate resource efficiencies with quality and productivity,
           Zero Defect
                                         spanning across all manufacturing and service industry sectors
              (ZED)
                                    •    Special focus on micro, small and medium enterprises (MSME)

                                    •    Partial Risk Guarantee Fund for Energy Efficiency (PRGFEE) for
                                         creating bankable energy efficiency projects
               Energy
                                    •    Partial Risk Sharing Facility (PRSF) for MSMEs to promote ESCO
             Efficiency
                                         financing model
             Initiatives
                                    •    Venture Capital Fund for Energy Efficiency (VCFEE) to provide ‘last
                                         mile’ equity capital to energy efficiency projects

                                    •    The draft National Steel Policy envisages a water requirement of
                                         1,500 million m3 per annum for the steel industry by 2030-31
           Emerging
                                    •    Focus to support initiatives for conservation of both water and
         Sector Specific                 energy
            Policies
                                    •    Aims to set international standards for pollution and water
                                         consumption for the Indian steel industry

Augmenting resource efficiency while limiting environmental impacts has been the cornerstone of
FEW aligned policies in industries.

2.2 Business Response
The corporate sector is a bulk consumer of Food-Energy-Water for its processes, while also
generating livelihoods and contributing 29.02% share to India’s GDP (Statistic Times, 2017). The
sector has been key to transforming these FEW resources and creating a variety of products for
human consumption. FEW resources is a key cost driver in corporate processes, and their security
remains of paramount importance to the survival of these industries.

Indian corporates have also started taking note of the risks associated with the scarcity of FEW
resources. As per a survey conducted by Carbon Disclosure Project, 55% of respondents believed
that water is impacting their business and more than half of the reporting companies had a water
policy, strategy or management plan in place (CDP, 2014).

Some of the industries which face immediate scarcity of FEW resources, and their response to this
scarcity is discussed:

Food processing

Food processing is one of the key industries which improves the life and quality of food available
for human consumption. The Ministry of Food Processing Industries has identified it as high water
and energy consuming industry (MOFPI, 2017) having a significant environmental impact. The

 22   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
companies have initiated innovation for conservation of these resources through focused action,
to entail multiple business benefits like reduced cost and reduced risk from future scarcity. Some
of these include:

   •    Saving water and energy by migrating towards low water consumption processes

   •    Using organic food waste to generate biogas

   •    Recycle waste water for alternative industrial / irrigation processes

Dabur striving for resource efficiency including water and energy

Dabur India Limited (DIL), one of the leading food processing companies in India, has been
working aggressively for water and energy stewardship. In FY-16-17, DIL has taken steps to
reduce water consumption in their manufacturing operations through establishing Effluent
Treatment Plants (ETP) to recycle and reuse water and to ensure that no water is discharged outside
the boundary. Over the FY 2015-16, DIL has substantially reduced its raw water consumption by
11%, increased treated effluent reuse and recycle by 9%, reduced hazardous waste generation
by 47% and increased energy efficiency leading to 24% reduction in greenhouse gas emissions.
These productivity improvement and resource saving initiatives have resulted in savings of INR 3
Crores for the company (Dabur India Limited, 2016-17).

Power

Power generation is one of the most water intensive industries and depends heavily on water
security. The various sources of power account for different water usage in their production and
cooling process (Figure 3).
                              Figure 3: Water operational use by energy type
                           Water Consumption for Operational use by Energy Type

                        Natural Gas                          Coal                       Nuclear                  Photovoltaic
                                                                                                               (Utility Scale Solar)

                                0 to
                                                              4 to
                          1,170                         1,100                              100 to

                                                                                          875
                                                                                                                        0to5
                       Gallons per MWH Gallons per MWH Gallons per MWH                                            Gallons per MWH
                      *Type of Cooling System Largely Determines the Consumption of Water for each Energy Soource
                       Source: http//aquasec.org/wp-contet/uploads/2011/09/macknick-etal-2012-water-electric-generation-coefficients-erl.pdf

                                                     FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India         23
The sector has also realized the extensive cost of water in power generation and has been using
technology-based solutions including:

      •     Changes in cooling technology, from Cooling Towers (highest consumption) to water
            efficient cooling technologies like Dry Cooling (lowest consumption)

      •     Use of grey water for cooling technologies

      •     Changes in energy mix from thermal based generation to renewable based generation

                                    National Thermal Power Corporation (NTPC)
                                    diversifying into renewables

  NTPC has started focusing on renewable energy for diversification, considering their abundant
  supply and least environmental impacts. In FY 2007, NTPC’s 27 GW power generation capacity
  was based only on fossil fuels. Now, with ambitions of evolving as the country’s largest green
  power producer, NTPC’s present 51 GW capacity includes 12 renewable energy projects (NTPC,
  2017).

Iron & Steel

Iron and Steel industry has very high consumption of two critical resources of energy and water.
The energy consumption of Indian steel plants ranges in 6 - 6.5 Giga Calorie per tonne of crude
steel, as compared to 4.5 - 5 in steel plants abroad (Ministry of Steel, 2017). Various initiatives
taken by the industry to reduce water and energy intensity of the sector include:

      •     Improvement of water use efficiency in processes (using software and state of the art tools
            to measure water consumption in processes)

      •     Switching to high energy efficient technologies which also reduce water consumption

                                                         Tata Steel adopting green technologies
                                                         in steel making
 Tata Steel has commissioned several energy efficient and environment friendly technolgies
 in order to reduce its input costs and environment impacts, while boosting productivity in
 steel making. It has re-established its environmental stewardship in steel manufacturing
 with introduction of India’s biggest clean coke producing facility at Kalinganagar Industrial
 Complex in Odisha (BusinessLine, 2017). This facility is commissioned with environment friendly
 Coke Dry Quenching (CDQ) unit that use an inert gas to cool hot coke, replacing conventional
 water spray method which results in high CO2 emissions and thermal energy loss. The process is
 supported by waste heat recovery system to generate electricity from the captured heat,
 increasing resource efficiency considerably. This environment-friendly technology will help in
 reducing carbon-dioxide emission to the extent of 0.11-0.14 tonnes per tonne of coke and dust
 emission to the tune of 300-400 gm per tonne of coke.

 24       FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
Other manufacturing industries including pulp and paper, cement and textiles have also adopted
modern practices and technologies to manage their food, energy and water consumption. The
service sector has also been active in reducing their food wastage, water and energy consumption.
Industries operating from commercial buildings are adopting green building codes, which reduce
the energy and water consumption considerably in the building.

Though the FEW nexus approach has made its way into the policies and strategies of both the
public and private sector, it remains in its incipient stage, requiring further action in scaling up FEW
interventions and approach across the economy.

                                      FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   25
26   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
3
    Global applications of
    FEW nexus approach

        FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   27
3
                                   Global applications of
                                   FEW nexus approach

Governments and the corporates are natural partners in incorporating the FEW nexus approach
in most socio-economic processes. While we have seen how the policies and strategies have
been directed towards achieving resources efficiencies, a multi-stakeholder collaboration may be
required for reaping all the benefits of the nexus approach.

The following section presents four case studies from India and across the globe on how
applying technologies and processes with incorporation of FEW factors and working with diverse
stakeholders has led to multiple benefits. These projects solve multiple FEW issues, and serve as
replicable and scalable solutions based on a nexus approach, with clear livelihood impact.

Case Study 1: India

World’s first solar irrigation farmer cooperative

Dhundi is an agrarian village in Kheda district of Gujarat. Water for irrigation is provided
mainly by pumping groundwater. This pumping is undertaken either through subsidized
electricity at INR 0.7/kWh, prone to over use, or through diesel powered pump sets sold at a very
high price of INR 400/ bigha/ watering, reducing agriculture margins. The introduction of solar
pumps to reduce the subsidy burden allowed the pump owner to sell water at INR 200 / bigha /
watering leading to over use of ground water resources. In order to provide sustainable water
pumping solution, by reducing dependence on subsidized electricity and also reducing groundwater
wastage through sale of excess electricity (Business Standard, 2017), the State Government with
its discoms introduced the net metering policy to allow the farmers to sell excess electricity
back to the grid. To leverage this opportunity, a farmer-led initiative Solar Pump Irrigators’
Cooperative Enterprise (SPICE) came together to install six solar pumps with a total capacity of
56.4 kWp. The members contributed INR 5,000/kWp for the installation of the pumps, with the

 28   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
rest being undertaken as a research grant by International Water Management Institute (IWMI)
and Consultative Group on International Agricultural Research (CGIAR) Research program on
Climate Change, Agriculture and Food Security (CCAFS) (Tushaar Shah, 2016). The Cooperative
also signed a 25-year Power Purchase Agreement with Madhya Gujarat Vij Company Limited
(MGVCL) at INR 4.63/ kWh to sell excess electricity back to the grid. The revenue generation
from the solar pumps nudges the farmer to use the water pump only till it is required, and
feeding back the rest to the grid, creating incentive for efficient use of groundwater and energy
resources.

The project led to multiple benefits for farmers, since the 56.4 kWp installation is expected to
generate 85,000 kWh/year, of which approximately 40,000 units would be used by the farmers
and the other 45,000 units could fetch the farmers an additional income of INR 3 lakh per
annum, which was more than the their investment in the first year itself. The irrigation from the
pumps and further income from selling power would be available to the farmers free of cost
for next 25 years. The utility saves on the subsidized power for which it has to bear the cost of
INR 4.5 / kWh, against a recovery of INR 0.7/ unit. In a span of 25 years, MGVCL can save upto
INR 8.17 lakh per annum and generate renewable energy from the net metering for complete
85,000 kWh. The solar pumping sets also save the carbon emission from diesel pumps / grid
electricity. The case study depicts that enabling policy (net metering), financial support
(subsidies and grants) and community involvement has enabled better irrigation for farmers,
saving ground water and promoting clean energy, while also providing an additional source of
income for farmers.

Case Study 2: Mexico

Leveraging Water – Energy linkages to achieve efficient water management, energy utilization
and livelihood generation (WaCClim, 2017)

Mexico’s urban water management sector contributes significantly to its overall greenhouse gas
(GHG) emissions. Considered together, drinking water, wastewater and end user heating contribute
up to 5% of Mexico’s total GHG emissions. Given the growing urbanization, the utilities across
Mexico were not able to provide basic water and waste water collection services at affordable price
to users. Water and Wastewater Companies for Climate Mitigation (WaCCliM) piloted a project
with a water supply service agency and a wastewater treatment plant along with the support
of Government bodies and relevant departments. The project interventions at the international
level involved creation of Energy Performance and Carbon Emissions Assessment and Monitoring
(ECAM) tool to quantify emissions from the sector. At the national level, improved political,
regulatory and institutional framework was developed like putting national mitigation targets
for Water and wastewater sectors, including indirect carbon emissions from energy efficiency
measures in pumping and aeration process to feed into Mexico’s NDC targets (Mestre, 2015).
These interventions were backed by introducing appropriate financing instruments for adoption
of energy efficiency and developing partnerships among utilities to strengthen their capacities and
technical know-how. At the utility level, capacity building was undertaken, technology upgradation
in terms of energy efficient pumps and activated sludge technology for producing biogas from
wastewater was installed and ECAM tool was used for continuous tracking.

                                    FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   29
All these interventions led to increased wastewater coverage for an additional 52,000 inhabitants;
wastewater collection and treatment increased from 48% to 81%, reduced emissions equivalent to
2,500 tCO2e/ year, biogas production of 400 Nm3 / year (energy saving of 71 MWh / year), reduced
energy use by 20% and 31,600 m3 / year wastewater reused.

The case highlights the interdependence in usage of energy and water in an urban set up and an
integrated approach to use municipal wastewater to generate electricity through generation of
natural gas and further channelization of water for other urban / industrial purposes. The reduced
cost to utilities and increased penetration of water services provided better lives & livelihoods for
cities in Mexico.

Case Study 3: Kenya

Renewable Energy Solutions for Lake Victoria Ecosystems (RESOLVE)- Bringing Wind/Solar
power to Lake Victoria fishing communities (Renewable World, 2017)

The region near the lake Victoria is non-cultivable and the population depends on fishing
for their livelihoods. The fishing also has to be done during the night as the days are hot and
sunny. Additionally, due to absence of adequate preservation techniques, the fish produced gets
spoiled before reaching the consumer. The region is not connected to the grid and power source
is a critical limiting factor for the community’s social and economic development. In order to
improve the livelihood of Kenyan fisherman community, six micro grids were installed to power
deep freezers. The involvement of the community was ensured by establishing Community Based
Organization (CBO) to manage and maintain the energy hubs in each community and formation
of Savings and Credit Cooperative (SAACO) to provide a mechanism that coordinates learning,
improves collective savings & cross lending across the communities and attracts external financing
for the maintenance and development of new energy hubs.

The project has been instrumental in alleviating the livelihood and living conditions of the entire
fishing community of the region, as they now have access to freezers to keep their stock fresh. As a
result, the average household income levels have increased by 9.4%. Average monthly expenditure
of a household on energy for lighting has decreased by more than 50% and use of solar-charged
lantern for night time fishing has improved the health and safety of the fishermen by removing the
kerosene pressure lamps from boats.

Case Study 4: Australia

Addressing the complete Food-Energy-Water nexus while sustaining local livelihoods by
Sundrop Farms

Port Augusta is situated in an arid, dry climate of Southern Australia, with degraded pasture lands
unfit for conventional agriculture. The lack of available resources has enabled Sundrop Farms
to produce vegetables sustainably on a 20 hectare facility by using a number of innovative
technologies in conjunction. The farm utilizes a solar thermal unit with 25,000 computer controlled
mirrors to generate electricity to run the farm, desalinate the seawater to produce fresh water
and salt and use the waste heat to control the temperature of the green house. The freshwater
produced is used for irrigation of tomatoes and high productivity is ensured through temperature
controlled greenhouses.

 30   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
As a result of these interventions, the facility produces over 16,000 tons of carbon neutral,
freshwater neutral tomatoes annually. About 260 jobs were created during the expansion of the
farm, and the farm employs 200 employees for day-to-day operations (Bookmyer, 2016). Sundrop’s
technology achieves significant energy and pollution savings compared to traditional methods
including approximately 26,000 tons of carbon dioxide per year (equivalent to removing 500 cars
from our roads), more than 450 million liters of freshwater per year (equivalent to 180 Olympic
size swimming pools) and more than 2 million liters of diesel per year (equivalent to driving a car
around the equator 500 times). The integrated solar thermal power plant is an excellent example
of innovative technology, which can transform the landscape through active support from private
sector, investors and policy makers and align with the FEW nexus to generate livelihoods as well
as business profit.

Based on the various insights from the four case studies, the next section focuses on steps that
India can take to ensure adoption of FEWL nexus becomes a norm, rather than an exception.

                                    FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   31
32   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
4
    Mainstreaming FEW nexus Approach
    for Livelihood

        FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   33
4
                                   Mainstreaming FEW nexus
                                   Approach for Livelihood

Food-Energy-Water resources are required for a range of domestic, industrial and environmental
purposes. Availability, accessibility and affordability of any of these resources can act as a limiting
factor for proliferating livelihood opportunities, thereby restricting economic growth. Rapid
industrialization, urbanization and population growth in India leading to an increased demand for
FEW resources has resulted in growing pressure on the fast depleting natural resources.

4.1 Risks and Vulnerability Context
Given the inter-linkages and constraints, livelihoods across
India are drastically affected in terms of sustainability and                             Risks and Vulnerability
shocks. Typically, shocks are categorized as household                                    1. Shocks
level or idiosyncratic shocks and community level or covariate
                                                                                          		 a. Household Level
shocks. While idiosyncratic shocks include illness, injury and
unemployment; community level shock include disasters,                                    		 b. Community Level
epidemics and conflicts. Further, macro-environmental or                                  		 c. National Level
national level shocks may impact livelihood opportunities
                                                                                          2. Seasonality / trends
due to sudden variances in energy resources’ costs and their
availability, impact of resource imports/exports, change in
political leadership and regulatory framework.

Apart from the one-time impact of shocks, the resources are also subject to a variety of trends
and seasonality. Major driver for estimating the future demand for food, water and energy is the
impact of weather conditions, as weather plays an important role in the fluctuation of energy
consumption throughout the year. Additionally, the variability of daily water consumption during
summer season is 1.2 – 1.6 times higher than the average annual daily consumption (A. Hussien, et
al., 2018). While the seasonal variability for water and energy is documented, most studies address
only the consumption during a particular period of the year (Costa et al., 2013). The seasonal
variability in food consumption is expected to be greater specifically in the developing countries,
where the price of the most food commodities varies seasonally (Leonard and Thomas, 1989).

 34   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
4.2 FEW Resource Assets
The extent of FEW resources determines the growth and livelihood opportunities that a nation
or society would support. While these natural assets / resources may provide a foundation for
growth, it would require the following assets / capital for its optimal utilization Twigg, 2015:

   •   Human Capital: skills, knowledge, ability to labour, good health

   •   Physical / Manufactured Capital: livestock, transport, tools and equipment, shelter, water
       supplies and sanitation

   •   Financial Capital: income and savings, earnings, credit, remittances

   •   Social Capital: networks and connections, membership of groups, relationships of trust,
       reciprocity and exchange, political systems and governmental processes

Further, livelihood enhancement and management strategies need to be aligned to policies,
processes and institutions. The focus of these policies, process and institutions is to reduce
livelihood related risks while promoting resilient opportunities by anticipating and planning for
changes of different kinds and adapt to them. Such interventions should build on existing coping
and livelihood strategies.

The Union Government has already embarked upon the ambitious plan of doubling farmer income
as a part of enhancing livelihood security for over 80 million (PIB, 2017 ) farming families, dependent
of agriculture. This is a landmark step which integrates FEW with livelihoods. In the past, the focus
has been on improving agriculture output and achieving food security, which resulted in India’s
food production growing by 3.7 times and 45% increase in per person food production (Chand,
2017). Theoretically, it may imply that with the high growth of farm output, the income of farmer
would also have increased. However, this is not a generic trend which was observed, as the farmer
incomes did not grow in proportion to the increasing output. A recent study reveals that over 33%
of farmers in Punjab are below poverty line (Pandhi, 2017). Earlier in 2014, a similar study revealed
that 80% of farmer in Haryana are under poverty line (Sharma, 2014). National Sample Survey
Office (NSSO) data further suggests that over 22% of Indian households employed in farming are
under poverty (Chand, 2017).

4.3 Strategies for improving livelihoods – FEW Approach
Ensuring sustainable livelihood for all requires strategic planning and execution of a holistic
strategy, which can improve livelihood opportunities and address vulnerabilities. Generation of
livelihood opportunities need to be enabled by coupling technology and finances, guided by the
policy and institutional framework.

                                     FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India   35
Development initiatives and policies to                                 Technology improvement will be critical
 drive improved productivity:                                            to achieving better yields through improved
      •   Access to quality seeds, fertilizers                           varieties, breeds, practices, knowledge &
          and pesticides for improved yields                             innovation and cost reduction. Government
                                                                         has deployed a network of ‘Krishi Vigyan
      •   Availability of irrigational water                             Kendras’ in every district to provide last mile
      •   Reliable electricity supply                                    connectivity of technologies, developed by
      •   Support to produce more than one                               the public research
          crop/livestock

Technology, especially the digital technology can play a very important role in the allocation of
resources through big data collection, storage and analytics. One of the biggest drawbacks in
predicting demand and formulating related policies is the lack of data. As the price of data collection
technologies reduces through the use of modern sensors, India may utilize this opportunity to
develop innovative technologies for collection, analysis and effective utilization of this data. For
example, the amount of water required for crops in different months, and electricity generated
through hydroelectricity and thermal power plants can help prioritize the flow of water based on
the value derived from each activity, thereby reducing the impact of seasonalities.

Leveraging Information Communications & Technology (ICT), Internet of Things (IoT), blockchain
and other cloud based solutions should be the next step in the nexus approach. For example, a
WATERIG hub is a decentralized water and energy collection point. Such tech-based, connected and
decentralized systems ensure transparency in allocation of resources and can be scaled to achieve
resource efficiency through a nexus approach. Adequate financial support from Government and
private sector is required for such technology solutions to become more widespread in India.

 Blockchain powered Water-Energy Hubs (Dale, 2017)

 The winner of the Massachusetts Institute of Technology (MIT) SOLVE Sustainable Urban
 Communities challenge, WATERIG is a start-up company that focuses on developing
 decentralized water and energy solutions. A water and energy collection hub can collect energy
 from the surrounding environment including solar, wind, waste energy and ground cooling,
 which is used to produce 2,000 litres per day. Modules around the hub can be provided with
 access to that energy and water for vertical farming, greenhouse growth, rainwater processing,
 water purification, and algae farming.

 WATERIG has incorporated 2 blockchains for:

      •   Tracking the ownership of each hub, enabling community-level crowdfunding and
          micro-ownership, without a central authority

      •   Collecting data on water, food production, and usage transactions by its members to
          grow a local

 36   FEWLing the Growth: Food, Energy and Water nexus for Livelihood Security in India
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